Under U.S. GAAP, entities are allowed to measure certain financial instruments and other items at fair value.
accounting
Description
HERTZ GLOBAL
HOLDINGS, INC. AND SUBSIDIARIES
THE HERTZ CORPORATION AND
SUBSIDIARIES
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (Continued)
Note 14—Fair Value Measurements
Under U.S. GAAP, entities are allowed to measure certain financial
instruments and other items at fair value. The Company has not elected the fair
value measurement option for any of its assets or liabilities that meet the
criteria for this option. Irrespective of the fair value option previously
described, U.S. GAAP requires certain financial and non-financial assets and
liabilities of the Company to be measured on either a recurring basis or on a
nonrecurring basis as shown in the sections that follow.
Assets and Liabilities Measured at Fair Value
on a Recurring Basis
The fair value of accounts receivable, accounts payable and
accrued expenses, to the extent the underlying liability will be settled in
cash, approximates the carrying values because of the short-term nature of
these instruments. The Company's assessment of goodwill and other intangible
assets for impairment includes an assessment using various Level 2 inputs
(earnings before interest, taxes, depreciation and amortization
("EBITDA") multiples and royalty rates) and Level 3 inputs
(forecasted cash flows and discount rates). See Note 2,
"Significant Accounting Policies — Recoverability of Goodwill and
Intangible Assets," for more information on the application of the use of
fair value methodology.
Cash Equivalents and Investments
The Company’s cash equivalents primarily consist of money market
accounts. The Company determines the fair value of cash equivalents using a
market approach based on quoted prices in active markets.
Investments in equity securities that are measured at fair value
on a recurring basis consist of available for sale securities.
The following table summarizes the ending balances of the
Company's cash equivalents and investments. The Company's money market accounts
as of December 31, 2016 were previously disclosed as using Level 2 inputs but
have been reclassified to Level 1 in the table below due to their fair values
having been determined using inputs that reflect quoted prices for identical
assets or liabilities in active markets that are observable.
